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Developments in China's Labor Dispatch Regulations

On 28 December 2012, the Standing Committee of the National People's Congress issued the Decision on Amending the People's Republic of China Labor Contract Law (全国人民代表大会常务委员会关于修改《中华人民共和国劳动合同法》的决定), effective 1 July 2013 ("Amendments"), which primarily served to tighten the use and proliferation of labor dispatch arrangements. The practical effect of the Amendments is that it will be difficult to outsource all or even the bulk of human resource functions to third party dispatch agencies.

On 23 January 2014, the Ministry of Human Resources and Social Security of the People's Republic of China issued the Interim Provisions on Labor Dispatch (劳务派遣暂行规定), effective from 1 March 2014 ("Interim Provisions"). The Interim Provisions provide much needed clarity to the Amendments' requirements on labor dispatch. Following the implementation of the Interim Provisions, all companies will need to evaluate their workforce arrangements to ensure any use of labor dispatch is in line with the current legal requirements.